Geopolitical tensions in the Middle East, involving the US, Israel, and Iran, have triggered a slide in Asian shares and a surge in oil prices. Investors are turning to the US dollar for safety amid fears of prolonged energy cost increases and inflation. While emerging markets face short-term losses, experts see long-term resilience.
The escalation of conflict in the Middle East has intensified market uncertainty, with Asian share markets declining due to surging oil prices that stoke inflation fears and the prospect of higher global interest rates. According to reports, Brent crude prices have risen sharply, threatening extended energy cost hikes as tensions between the US, Israel, and Iran persist. Central banks now confront a challenging inflation environment.
In India, the Nifty index has breached its 200-day moving average, heightening correction concerns amid weak global cues and geopolitical risks. Geojit Investments' Anand James notes that the Nifty slide may extend to 23,535, though a mean-reversion bounce remains possible. He highlights key support levels and potential rebound in the Nifty IT sector, while sharing stock picks for the week.
Emerging markets have suffered significant setbacks, with stocks and currencies dropping sharply and bond yields rising. Despite these pressures, many investment firms maintain a positive long-term view, pointing to diversification benefits away from US assets, attractive valuations, and robust economic growth. Some investors are capitalizing on the dip to acquire more securities.
Amid broader volatility, low beta stocks in India are performing well. Over one in four BSE 500 stocks posted positive returns in the past month, often with lower volatility than the market average. Companies focused on domestic operations, such as Finolex Cables, Hitachi Energy India, and Schaeffler India, have delivered double-digit returns across various periods, underscoring their stability in turbulent times.
